- (1.) The Tribunal, Allahabad, has referred the following question of law under Section 256(1) of the Income-tax Act (hereinafter referred to as the Act) for opinion to this Court : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in invoking at the Tribunal's stage the provisions of the Expln. 1 to Section 271(1)(c) of the IT Act, 1961, as applicable w.e.f. 1st April, 1976 and in thereby upholding the imposition of the penalty of Rs. 13,000 on the assessee under Section 271(1)(c) ?"
(2.) For the year 1975-76, the assessee filed its return of income on 10th Feb., 1978, declaring a total income of Rs. 1,76,130. The ITO, however, framed the assessment on a total income of Rs. 2,24,130 under Section 143(3) of the Act, on 31st March, 1978. One of the components of the, total income determined by the ITO was Rs. 13,000 which was included in the total income of the assessee in the following manner: "On scrutiny of cash book, the following deposits were found : Rs. 5,000 Smt. Rani Gupta2,000 Smt. Sheela Rani Gupta3,000 Shri Hans Raj3,000 Shri Navin Chand Gupta 13,000 Vide order-sheet dt. 23rd March, 1978, assessee was required to prove the nature and source of these deposits. No evidence has been filed. It, thus, appears that assessee has nothing to say to prove these deposits. Accordingly, a sum of Rs. 13,000 is treated as assessee's income from undisclosed sources. Notice under Section 271(1)(c) has also been issued for concealing the particulars of this income." After considering the assessee's reply to the show-cause notice under Section 274/271(1)(c) of the Act, the ITO was of the view that the assessee had clearly exposed itself to the provisions of Section 271(1)(c) of the Act, in respect of the addition of Rs. 13,000 made in the assessment. He, therefore, imposed penalty of Rs. 13,000 under that section vide his order dt. 26th March, 1980.
(3.) In appeal before the CIT(A), the assessee once again urged that no penalty could be imposed under Section 271(1)(c) of the Act in respect of the addition of Rs. 13,000 made in the assessment. The CIT(A), however, upheld the action of the ITO.;